Economic citizenship in Asia: is Cambodia's second passport a scam?

Economic citizenship in Asia: is the Cambodia second passport a scam?

Last updated July 2, 2016

Dateline: Siem Reap, Cambodia

In Khmer, Siem Reap literally means “Siam defeated”. It’s an old tribute to the great expansion of the Khmer Empire, which covered most of historical Indochina – and beyond – in southeast Asia.

One thousand years ago, little was being written about Europe. It was a backwards place. Asia was where the action is. Interesting how cyclical things are, isn’t it? And the Khmer Empire was at the center of the action. Khmers had access to an ever-growing territory and political stability.

These days, the situation isn’t quite as rosy.

As a result of imperialism, wars, and countless other interventions, Cambodia is now a shell of its former self. And government tyrants like Pol Pot didn’t exactly help the overall flow of economic freedom and growth.

But Cambodia’s need for investment creates opportunities for those looking to take advantage of frontier market investment potential. That may or may not come with extra benefits.

I’ve been talking to a few expat investors here in Cambodia, and several of them have mentioned the vague possibility of obtaining Cambodia citizenship and a second passport by investment.

Not only are the US citizens who live and invest here subject to draconian tax laws on money the US government had nothing to do with, but foreigners are excluded from owning certain assets here, namely ground floor apartments and agricultural land.

For those looking to invest as a local, a Cambodian passport is the only fool-proof workaround. But unless you’re married to a Khmer, you’ll have to jump through some hoops to obtain such a passport… and even if you could, I have serious doubts as to whether you’d want it.

You see, investors around the world use second passports to invest in places and projects they otherwise wouldn’t be welcome. Israeli citizens obtain dual citizenship to invest in other parts of Southeast Asia such as Malaysia where Israelis are banned, for example. Others obtain citizenship so they don’t have to put property in their spouse’s name.

So for those who agree with me that Cambodia real estate is a good market (in fact, it’s the only Southeast Asia real estate market I would and am invested in), the question remains: is Cambodia’s alleged second passport program a scam?

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After all, the internet is full of shady “lawyers” sitting in some urine-soaked office on a remote island selling “offshore services” to suckers. One of the highest ranking results for second passports on Google just shut down recently.

You have to be careful.

Technically, Cambodia has no second passport program, since obtaining a second citizenship requires either an economic contribution (ie: in the Caribbean) or by actually living there. The people talking about Cambodian citizenship for sale do live here, but haven’t for long, and they are also curious if their absentee investors would qualify as well.

That’s the first red flag.

The only way to tell if you can legally obtain citizenship in a country is by reading its Constitution. There is a specific law you can point to and say, “there is what makes economic citizenship legal”. After all, “economic citizenship” is just a nice way of saying “citizenship for sale”, or “citizenship as a thank you for investing”.

Anything else is a black market second passport and should be avoided.

That’s not to say that no one has received a Cambodia passport. I know someone who did, in exchange for the alleged going rate of $50,000. (I’ve also heard $60,000, which would likely include legal fees and other mark-ups). However, that doesn’t mean anything; any corrupt official can churn out a “real” passport without recording you as a citizen. Even if you do obtain a citizenship certificate, it could be canceled later if you obtained it through bribery.

That’s the worry with these shady programs; you could pay some guy with a “connection” $50,000 only to get some fake papers.

Here’s how the program is purported to work: you make a donation of $50,000 to the government as an “investment”. All told, the process is supposed to take a little over three months, which was corroborated by my contact here.

Still, I’d avoid it. This article from all the way back in 1996 talked about the Cambodian government debating a draft law that would allow anyone who invested $500,000 to receive immediate citizenship… as soon as they proved they could speak Khmer.

Or, for a $400,000 donation – money you’d never see again – they suggested you could receive citizenship without learning the language. The investment would make sense if you wanted to invest anyway, but I doubt you’d want to learn Khmer. And the donation is a joke; you could get better for less.

I find it pretty suspect that $50,000 is the price for a citizenship now, nearly 20 years later, when almost every other citizenship by investment program has increased their rates.

From what I’m told, even low-level Cambodian officials aren’t interested in $50,000 payoffs to hand out questionable passports going forward. With all of the wealthy Russians developing $1 million villas on islands of the coast, paying $50,000 so you can buy some cheap land in a province and build a hut isn’t so attractive to the government.

Oh, and one more problem: what will you do with a passport from Cambodia?

It’s not exactly the world’s best travel document, and most of the countries that don’t are either in southeast Asia or Africa. Worse yet, I know several experts who have consulted in immigration matters in Southeast Asia. They tell me that anyone who was to actually use their Cambodian passport to get into any of the neighboring countries would be thrown in a tiny cell and interrogated like crazy.

Everyone would know you, the pasty white guy, aren’t Khmer. Not even close.

The purported benefit of having a Cambodian passport wasn’t in its travel benefits, but more in being able to buy land, a privilege restricted only to locals.

While real estate in Phnom Penh has somewhat stagnated – I wouldn’t call it a bubble but it’s ceased to be dirt cheap – land in the provinces in some cases is dirt cheap.

If you have a solid plan to invest in Cambodia, a Cambodian passport would come in handy.

Just because you get a passport doesn’t mean it’s legitimate. Or good for travel. Heck, some of them aren’t even any good for banking.

Yes, some Chinese guys with hot money have purchased passports from places like Burkina Faso for the sole purpose of applying for residence in Hong Kong. That may work for them, but it won’t work for you. Play by the rules and find a legitimate program.

Cambodia is a beautiful place to visit, but I don’t suggest making it your second passport.

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Andrew Henderson

Andrew Henderson is the world's most sought-after consultant on legal offshore tax reduction, investment immigration, and global citizenship. He works exclusively with six- and seven-figure entrepreneurs and investors who want to "go where they're treated best". He has been researching and actually doing this stuff personally since 2007.
Andrew Henderson
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